LONDON, Sept 16 Britain will sell a 6 percent
stake in part-nationalised Lloyds Banking Group at a
price of at least 75 pence per share, raising over 3.2 billion
pounds ($5.1 billion), three sources familiar with the
transaction said.

UK Financial Investments launched the sale of the
government's shares in Lloyds earlier on Monday, a milestone in
the country's recovery from the 2008 financial crisis, during
which taxpayers pumped a combined 66 billion pounds into Lloyds
and Royal Bank of Scotland.

"We want to get the best value for the taxpayer, maximise
support for the economy and restore them to private ownership,"
a Treasury spokesman said.

Britain pumped 20.5 billion pounds into Lloyds during the
crisis, leaving taxpayers holding a 38.7 percent stake. The sale
will reduce its stake to 32.7 percent.

Although the size of the stake being sold is lower than some
analysts had expected, it is still comfortably above that of the
Royal Mail, which is expected to raise between 2 and 3 billion
pounds in its upcoming privatisation.

"It's a great signal it has been kicked off, the wheels have
started to turn," said Chirantan Barua, analyst at Bernstein.

Shares in Lloyds closed on Monday at 77.36 pence and the
average price at which the government bought the shares was 73.6
pence.

Labour finance spokesman Chris Leslie said the sale should
be used to repay national debt.

"It's vital that taxpayers get their money back and this
must be the prime consideration in the sale of the government's
stakes in the banks," he said.

The sale is a vindication for Lloyds' Chief Executive
Antonio Horta-Osorio, who has restored the bank to profitability
since his appointment in 2011, simplifying the business to focus
on lending to UK households and businesses.

Horta-Osorio said: "I believe this reflects the hard work
undertaken over the last two years to make Lloyds a safe and
profitable bank that is focused on supporting the UK economy,"
Horta-Osorio said."

The turnaround had prompted hopes the bank will start paying
dividends again next year, having seen its shares double in
value over the past year.

"The focus on selling non-core businesses as well as cost
reduction has improved the bank's capital position to a point
that it could return to distributing dividends to shareholders
in the medium term," said Paras Anand, head of European Equities
at Fidelity Worldwide Investments.

UKFI, which manages the government's stakes in Lloyds and
Royal Bank of Scotland, said it had agreed not to sell
any more shares in the bank for a period of 90 days. The
government is expected to sell the shares in several tranches.

Bankers say later sales are likely to include an offering to
private retail investors.

JPMorgan, Bank of America Merrill Lynch, UBS and Lazard are
handling the sale.

Timeline -

Next In Market News

Dec 9 President-elect Donald Trump said on
Friday he would name Andrew Liveris, chairman and chief
executive of Dow Chemical Co, to head the Manufacturing
Council, a private sector group that advises the U.S. secretary
of commerce.

Reuters is the news and media division of Thomson Reuters. Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. Learn more about Thomson Reuters products: